Inventory Models
Uncertain Demand: The Newsvendor Model
Background: expected value
A fruit seller example
Undamaged mango
Damaged mango
Profit
$4
$1
Probability
80%
20%
What is the expected profit for a stock of 100 mangoes ?
0.8 x 100 ($4) + 0.2 x 100 x

Queues
Objectives and Agenda:
1. Queues in life and in operations management
2. Littles law
3. Queuing models, notations and some results
The problem of queues
Time spent in queues per year (USA): ~ 37,000,000,000 hrs
20 million person-years
Queues in op

IELM 2010 Tutorial
9
By CHEUNG Chong Mo, Terence
12th November 2015
Situation 3: Uniform
demand, no shortages,
bulk-order discount
Typical form of discount:
Order quantity
Cost per item
Q < 1000
10=c1
1000 Q < 2000
9=c2
2000 Q
8=c3
Should we order 999? 1

IELM 2010 Tutorial
7
By CHEUNG Chong Mo, Terence
4th November, 2015
Quality Control
What is quality?
Performance
Performs better
More features
Reliability
Frequent repair = poor quality
Durability
Expected life / service time
Aesthetics
Variabi

IELM 2010 Tutorial
10
By CHEUNG Chong Mo, Terence
25th November 2015
Queues
Three common Key Performance Measures:
Throughput (th) (average throughput)
The number of units that pass through the system per unit time
Work-in-process(wip)
The total numb

IELM 2010 Tutorial
8
By CHEUNG Chong Mo, Terence
11th October 2015
Continuous review
model
Why continuous?
The business will continue. Keep review the business.
Economic order quantity (EOQ)
Parameters in EOQ
Demand (consumptions) rate: a unit / month
O

IELM 2010 Tutorial
3
By CHEUNG Chong Mo, Terence
23rd September 2015
Outline
Difference between minimum spanning tree and
shortest path problems
Shortest Path Problem (Dijkstras method)
Difference between
minimum spanning tree
and shortest path
Minimum

Logistics & Supply Chain Management
Objectives and Agenda:
1. Basics of logistics and its role in the modern economy
2. Relation of logistics with Supply Chain Management (SCM)
3. The role of inventory management in SCM
4. Deterministic inventory models
5

IELM 2010 Tutorial
6
By CHEUNG Chong Mo, Terence
14th October 2015
Example in Lecture Note
A fertilizer factory manufactures two types of fertilizers: A and B
Type A: high in phosphorus
Type B is low in phosphorus
A and B use three raw materials: urea, ro

Logistics & Supply Chain Management
Objectives and Agenda:
1. Basics of logistics and its role in the modern economy
2. Relation of logistics with Supply Chain Management (SCM)
3. The role of inventory management in SCM
4. Deterministic inventory models
5

IELM 2010. Industrial Engineering & Modern Logistics
Fall 2015, Assignment 1. Due: Sept 24. Max score: 10
Q1. Reading assignment
[1]
Look up the description/reviews of the suggested readings books (use google and/or reviews on
Amazon.com) and identify the

Quality Control
Agenda
- What is quality?
- Approaches in quality control
- Accept/Reject testing
- Sampling (statistical QC)
- Control Charts
- Robust design methods
What is Quality
Performance:
- A product that performs better than others at same functi

DEPARTMENTOF IELM, HKUST
Homework2
IELM 4100 Integrated Production System
Due Date: Mar. 4th, 2016
PROBLEM 1
A local semiconductor firm, Superchip, is planning its workforce and production levels over next year.
The firm makes a variety of microprocessors

D EPARTMENT OF IELM, HKUST
Homework 2
IELM 4100 Integrated Production System
Due Date: Mar. 4th, 2016
P ROBLEM 1
A local semiconductor firm, Superchip, is planning its workforce and production levels over
next year. The firm makes a variety of microproces

IELM 2010 Tutorial 1
By CHEUNG Chong Mo, Terence
What is Industrial Engineering?
The Engineering of making smart decisions
Decisions of what? The design, installation and
operation of integrated systems
i.e. product design, ergonomic(bio technology),
f

Markovian processes
Objectives and Agenda:
1. Definitions of Markov chains
2. Markov chains in life
3. Simple examples (weather forecasts, Google page rank)
Markov Chains
Process: We are interested in a system that can be in one of a countable
number of p

IELM 2010. Industrial Engineering & Modern Logistics
Fall 2015, Assignment 5. Due Date: Nov 30 Max score: 24
Q1. EOQ models
[1+2+2=5]
[Hillier&Lieberman, 18-3-6]. Kris owns a hardware store that sells (among other products),
50 hammers per month. He curre

Facilities Planning
Objectives and Agenda:
1. Different types of Facilities Planning Problems
2. Intro to Graphs as a tool for deterministic optimization
3. Finding the Minimum Spanning Tree (MST) in a graph
4. Optimum solution of a Facilities Planning Pr

Facilities Planning
Objectives and Agenda:
1. Examples of Shortest Path Problem
2. Finding shortest paths: Dijkstras method
3. Other applications of Shortest path problem
Example (Shortest Path Problem)
What is the shortest route from Point A to Point B ?

Logistics Routing Plans: Max Flow Problem
Objectives and Agenda:
1. Examples for flow of materials over limited capacity channels
2. Finding maximum flows: Ford-Fulkerson Method
Logistics supply problem: Example 1
5
10
PokFuLam
30
50
ai
Ch
an
W
Western
Ce

Project Planning and Management
Agenda:
1. Motivation to study project planning
2. A Method: CPM/PERT
Project Planning: Motivation
Large scale projects (e.g. HK Disneyland)
Project requires completion of
hundreds of different activities by
several differe

Linear Programming (LP)
An important topic of Deterministic Operations Research
Agenda
1. Modeling problems
2. Examples of models and some classical problems
3. Graphical interpretation of LP
4. Solving LP by Simplex using MS Excel
5. Some theoretical ide

Solving LPs using Microsoft Excel
Common LP Solvers:
Commercial:
LINDO, CPLEX, AMPL, OSL,
Free software:
Several available on web, e.g. try:
google search: java LP solver
Setting up Microsoft Excel
Step 0: Link the solver libraries
MS Excel Tools Add-Ins

Linear Programming (LP)
An important topic of Deterministic Operations Research
Agenda
1. Modeling problems
2. Examples of models and some classical problems
3. Graphical interpretation of LP
4. Solving LP by Simplex using MS Excel
5. Some theoretical ide

Solving LPs using Microsoft Excel
Common LP Solvers:
Commercial:
LINDO, CPLEX, AMPL, OSL,
Free software:
Several available on web, e.g. try:
google search: java LP solver
Setting up Microsoft Excel
Step 0: Link the solver libraries
MS Excel Tools Add-Ins

Linear Programming Fundamentals
Convexity
Definition: Line segment joining any 2 pts lies inside shape
convex
NOT convex
Linear Programming Fundamentals.
Nice Property of Convex Shapes:
Intersection of convex shapes is convex
Linear Programming Fundamenta

Inventory Control
Inventory: A stock of materials kept for future sale or use
Why Keep Inventory?
Example 1. Ajays Orange Juice consumption
OPTION 1
1.8L carton / 1 each week
Costs:
Risks:
OPTION 2
300ml carton/ 1 each day
Refrigeration
Capital tied up (i

APPENDIX: Derivation of the Newsvendor model optimal solution
[These notes are for reference only not included in the exam]
In elementary calculus, we know that extreme points of a smooth, differentiable function
f(x) can be obtained by solving the equati

Ergonomics
Ergonomics = Human Factors
Focus:
Interaction of humans with devices
Objective:
To understand, evaluate, and thereby, to improve
the interface between the human and the device
Outline
1. Examples of product design related to ergonomics issues
2

Quality Control
Agenda
- What is quality?
- Approaches in quality control
- Accept/Reject testing
- Sampling (statistical QC)
- Control Charts
- Robust design methods
What is Quality
Performance:
- A product that performs better than others at same functi